They really didn't have a choice. They were already well into development while THQ was falling apart. Had they been working on a new engine, there probably wouldn't have been an SR4.

THQ was sinking fast, so it was decided to make the expansion into a full game. Then THQ folded. Like it or not that was the situation they were in.

Going forward it may end up saving the franchise. If the dev costs were kept low they won't have to sell as much to make a profit. And a healthy profit could mean a continuation of the series next gen.